Jul 30, 2026 earnings call — Half-year results: growth, margin and execution
3.1% organic sales growth in Q2 and 120 basis points operating margin improvement at constant currency.
Revenue $7.5B (est $7.4B) · EPS $0.28 (est $0.27)
Key quotes
"One is the stronger execution, and we've talked about that. That's the shelf resets, the self placements across key categories and key customers."
"So the 120 basis points improvement in margin -- in operating margin at constant currency is coming from gross margin, up 140 basis points."
"Douyin grew more than 100% in the quarter and key brands that underpin that were in Centrum, Caltrate really strong in terms of driving growth in Douyin."
Analyst Q&A 12
North America growth and investment
Q (Cedric Besnard · Citi): The analyst asked about progress in North America, the benefit from shelf resets, and how to think about organic growth for the rest of the year. He also asked whether the business is still investing enough and which KPIs ensure no category or market starts over-earning.
A: Management said North America is making good progress with 3.1% organic sales growth and 2% volume, driven by shelf resets, innovation and e-commerce. They said they are investing in growth (A&P roughly just below about 21%) and will step-up investment in the second half where they see opportunity.
"So for me, listen, good progress in the U.S. I feel good about that." — Brian McNamara (CEO)
Margin drivers and A&P KPIs
Q (Dawn Allen): The analyst asked how the margin improvement was achieved and whether it came from cutting investment. He also asked what KPIs the company uses to ensure A&P is efficient and effective.
A: Management said margin improvement is driven by supply chain efficiency, not by cutting investment, and pricing is in line with inflation. They said A&P remains important at 20.9% and they evaluate (1) buying efficiency, (2) spend effectiveness via market mix modeling, and (3) driving reach and relevance, shifting spend dynamically to high-return areas.
Respiratory Health and China
Q (Guillaume Gerard Delmas · UBS): The analyst asked which respiratory subcategories (cough and cold, allergy, smoker's health) should improve first and whether respi drives the back-half OSG acceleration. He also asked what is driving double-digit volume growth in China and how to think about pricing there.
A: Management said respiratory breaks into three: cold and flu (off-season and weak this quarter), allergy (seasonal swings), and smoker's health (declining but stabilizing). For cold and flu they expect the back half to see growth off 2 years of decline and they view the weakness as cyclical.
"What we're assuming in the back half is we see growth off of this 2 years of decline." — Brian McNamara (CEO)
China growth drivers and pricing
Q (Dawn Allen): Following up on China, the analyst asked what drove high single-digit growth and whether negative pricing was a one-off from hospital channel moves and Douyin investment, and if margins are at risk.
A: Management said China was up high single digit in Q2, driven by increased investment in Douyin (Douyin grew more than 100%), stronger Centrum and Caltrate performance, Voltaren expansion including hospital channel listings, and doubled content creation. They said pricing was negative due to hospital channel volume-based procurement and Douyin investment, but gross profit and margins in Asia Pac remain strong.
VMS portfolio and pain relief drivers
Q (Nicolas Jerome Ceron · BofA): The analyst asked whether the VMS portfolio misses any consumer needs and if M&A is required. He also asked what drove the pain relief acceleration and whether mid-single-digit growth is sustainable.
A: Management said they like the VMS portfolio and are already activating new products (Centrum mid-single-digit growth in H1 and recent double-digit consumption), but they acknowledge there are higher-growth VMS spaces they don't participate in and will consider organic innovation and bolt-on M&A. On pain relief they cited Voltaren strength (including a Voltaren 12-hour in China and shelving benefits), Panadol Dual Action rollout, and Advil share stabilization as drivers of improvement.
"One example I would give you is our GLP-1 variant on Centrum, which we launched in the U.S. as part of our broader GLP-1 effort to support consumers on that journey and activate in retail." — Brian McNamara (CEO)
Latin America and Europe performance
Q (Warren Ackerman · Barclays): The analyst asked what the new LatAm team is doing differently on price/pack and consumer understanding and whether the LatAm step-up is sustainable. He also asked why Europe was softer sequentially and whether any pharma channels or countries are causing weakness.
A: Management said LatAm improved from flat to high single digits after appointing a new regional leader who focused on price gaps (example: targeted Sensodyne price changes in Brazil drove double-digit volume) and better execution targeting low-income consumers. On Europe they said the region is tougher with low single-digit category declines, but the company is growing share and executing against expectations; they are not counting on macro change in Europe.
"And so that would drive double-digit volume growth." — Brian McNamara (CEO)
Cold & flu sell-in timing and competition
Q (Mikheil Omanadze · BNP Paribas): The analyst asked the sell-in timeline for the season, whether a competitor's major cold & flu innovation is a challenge, and about H2 price/volume mix and any one-offs in Q2.
A: Management said sell-in for cold and flu happens in July and August and the big seasonality risk is later in Q4. They said they are aware of competitor launches but feel good about their cold and flu plans and execution for the back half.
"So July and August typically is when sell-in happens in cold and flu." — Brian McNamara (CEO)
Price versus volume and Q2 events
Q (Dawn Allen): The analyst asked about the price/volume split for H2, whether H2 should be more balanced, and whether any significant one-offs helped Q2 (events like Prime Day or World Cup).
A: Management said they are improving the price/volume balance and saw volume step-ups from Asia Pac and North America in Q2, offset by weaker EMEA volumes. They expect a step-up in volume mix in half 2 versus half 1, pricing broadly similar H2 versus H1, and no significant one-offs to call out beyond normal promotional events.
Gap to medium-term growth target
Q (David Hayes · Jefferies): The analyst asked which big items (Asia, Middle East, U.S. momentum, Brazil execution) explain the gap to the mid-term 4%+ target and whether 4%+ is achievable in H2 as those gaps resolve.
A: Management said they are below the 4% to 6% medium-term ambition and highlighted that getting there depends on stronger emerging market growth (they expect emerging markets can get to high single digits), continued U.S. progress (aiming for 3%–4% in the U.S.), and improvement in Middle East (they expect less drag in H2). They reiterated confidence in their 3% to 5% guidance for the year but would not give additional H2 guidance beyond that.
"So listen, on the growth profile, by the way, you are right that we are below our 4% to 6% medium-term ambition, and we are very focused on getting back to there." — Brian McNamara (CEO)
Supply chain savings and margins
Q (Dawn Allen): The analyst asked if supply chain productivity savings are lumpy and how COGS inflation and contract roll-offs affect gross margin in H2.
A: Management said margin progress comes from a three-part supply chain productivity program (complexity reduction, operational efficiency, and network optimization) that continues to deliver and is tracked into the future. They expect further gross margin improvement in H2 but noted Middle East cost increases (freight and contract roll-offs) will be absorbed and that operating model savings (GBP 175 million to GBP 200 million total, roughly 1/3 expected this year) will be allocated between reinvestment and drop-through.
Oral Care sustainability and LatAm execution
Q (Callum Elliott · Bernstein): The analyst asked what the sustainable long-term growth rate for Oral Care should be given strong recent growth and competitor weakness, and whether the Brazil Sensodyne pricing issue reflects weak competitive intelligence infrastructure.
A: Management said Oral Care growth is strong (Sensodyne and Parodontax performing well) and is driven by innovation and new penetration, including large innovations in the clinical range; they noted India as a strong growth case. On LatAm they said the operating model change and new leaders were deliberate, acknowledged occasional missteps happen, and said they expect the new structure and talent to improve agility and execution.
"A lot of times, when you see our competitors moving around on stuff, it tends to be because they're fighting each other." — Brian McNamara (CEO)
Reaching more consumers and AI benefits
Q (Edward Lewis · Rothschild & Co Redburn): The analyst asked for an update on the plan to reach 1 billion more consumers amid volatility and whether AI is delivering more margin or productivity benefits than expected.
A: Management said the strategy to reach low-income consumers (example: INR 20 pack in India) is a medium- to long-term opportunity and is already showing proof points like 20% growth in India driven by that SKU and route-to-market work. Management said they are investing in AI across supply chain and demand, citing consumption-based forecasting, scheduling, preventative maintenance, and tools that improved forecast accuracy and operational effectiveness and that AI is embedded end-to-end and delivering benefits.
"So in terms of supply chain, we have built quite a connected chain of AI interventions from consumption-based forecasting to production scheduling, preventative maintenance and inventory deployment." — Dawn Allen (CFO)